How To Buy Real Estate At Tax Sale

Buying tax delinquent property at tax sale is a profitable land buying method. However, buyers sometimes pay too much for the property or buy real estate that has serious title problems. Often the purchased property is not as expected, it may be inaccessible, a steep hillside, desert or undesirable in some other way. Follow the steps below to avoid these problems.

Tax Sales Process

Property is sold by the county for delinquent taxes. It often takes five years of delinquencies before the property is sold. Some states sell tax certificates. In this case you are buying the tax debt from the county not the property. We will focus on states that conduct auctions.

After meeting the requirement (number of years of delinquent taxes) the auction is held. Like any auction, the property is sold to the highest bidder. It is usually held annually at the local courthouse.

Property owners can redeem the property anytime before the actual auction. This means that the preparation and research I will describe below may be wasted if the property is redeemed before the sale.

Buy Before Property Tax Sale

Before going through the steps I want to share a great strategy to buy tax delinquent land. Contact the owner before the sale and offer to buy for a small amount. Then pay the taxes and you will own the property before the sale. Many owners will jump at the chance as they know they are about to lose the property.

This may not always be to the advantage of the seller as they are entitled to any proceeds from the auction above what is owed in delinquent taxes.

Check For Clear Title

Always have the title of the property checked before making a bid. This takes preparation and you will need to contact a title company before the auction. My title company is often contacted the day before the sale to check the title. That is not enough time to do a title search.

Many people buy property at the auction, discovering later there are title problems. The land may have loans, liens or other title problems. Don’t buy without knowing the title condition.

Check Real Estate Listings

I have seen property sell at a tax deed auction for 2 or 3 times what adjoining property is listed for by a realtor. The listed property is not only cheaper but you also receive clear title, and have a realtor to do much of the work and show you the property.

Why buy real estate with title problems if you can buy property through a realtor cheaper and without title problems?

Avoid Auction Fever

Most importantly avoid auction fever. Auctions are exciting and it becomes a competition to win. Many bidders do it for fun with no idea what they are buying. Focus on a couple of properties and don’t pay more than they are worth.

Tax auctions have become so popular that owners are now buying property and intentionally not paying the taxes. When the real estate is sold at auction they receive any money above the delinquent taxes. If the property sells for a good price they clear a nice profit.

A Tax Deed Sale can be a great opportunity to get property at a great price but only if you prepare by doing your research before the auction.

Cheap Land and How to Find It

Cheap land or anything else is not always best of course, but in this case we are discussing getting a good deal on land.

Utah Tax Sale

In a Utah Tax Sale the delinquent tax property is sold at public auction. The county keeps the amount owed for delinquent taxes, plus penalties and interest, any remaining money is forwarded to the owner.

You can attend the tax sale auction to buy property. You need to research the property ahead of time, to find out the approximate value, any title problems that the property might have (that aren’t extinguished by the tax sale), and other details such as legal access, water rights, etc.

Many people get an excellent deal on property at a tax sale. Others pay several times what the property is worth, so do your research to get the best price possible.

Another option is to contact the owner before the tax sale and make them an offer on the property. You will avoid the auction itself and often pay less than you would at the auction. A county waits until there are several years of delinquent taxes before selling the property. You can contact the owner before this time and often get a good deal.

Foreclosure Property

Foreclosures may be the best for how to buy cheap land. There are three basic stages in a foreclosure.

1. Default

During the default stage the property has not been foreclosed, but the seller has been notified that a foreclosure is in progress. During the early part of this stage the foreclosure can be automatically stopped by paying the overdue amount or a negotiated amount. You can contact the owner and offer to buy the property. Owners in foreclosure can be very motivated to sell.

2. Foreclosure Sale

If the delinquent amounts are not resolved during the default phase the property goes to a foreclosure sale. Anyone can bid on the property at the sale. Contact the company handling the foreclosure and ask what their requirements are.

Similar to tax sales, you need to do your research before the foreclosure sale. Know what the property is worth before bidding.

3. Foreclosed Property

The lender usually receives the property after the foreclosure sale for a variety of reasons. Few people show up at foreclosures and often the minimum bid is more than the property is worth.

The Lender is motivated to sell the property quickly and will entertain any reasonable offer. Contact them and make an offer.

Assume The Existing Loan

Although this is more difficult to do, it can be an excellent way to buy land. The current owner may be tired of the property and willing to sell it for little or no money, if you will assume the payments. This only works if the property is financed by an individual. Banks don’t usually allow anyone to assume their loans.

This method of buying cheap land can be combined with the tax sale or foreclosure methods above. You can contact the owner, pay the delinquent amounts, and take over the payments. Use an attorney or title company so the proper paperwork is filed, and the land is properly transferred to you.

Bankruptcies

Bankruptcies are public. You can contact the court or attorney handling it and offer to buy property involved in the bankruptcy. You will need to research what property is owned by the person filing bankruptcy.

This method is more difficult to use than the others, but can be an excellent way to buy property below market value. There are many methods to learn about how to buy land cheap. The above are just a few.

Buying Real Estate at Tax Sale. How to buy Real Estate at a tax sale. This is a great way to get a good deal on property, but auctions are a buyer beware place. Know before you buy.

Buying Real Estate at Foreclosure Auctions. Buying Real Estate at Foreclosure Auctions. To be successful you need to know the property, its value, and any liens or other title problems.

Tag: tax sale

Buying Real Estate at Tax Sale